Setting up Business Entities

[Account Closed]

When building a Real Estate Portfolio, should there be a separate entity for each property?

Should the finances of the property by handled through that entity or a different one. I was told the property holding entity should hold no money. Can a different LLC from the LLC that owns the property handle its finances?

If you set up an entity for the business and one for each property, should they be connected legally in any way, or kept separate for asset protection?

[Rick H.]

Asset protection is one thing; privacy is another. Neither a LLC or trust will fully protect you from a lawsuit as most attorneys will just name you personally in the suit. Ask me how I know!

Joe's point about insurance is valid.

There are a number of things going on here: Federal and State tax implications, management, asset protection and bookkeeping/operational aspects to name the big ones. 

I have several corporations, one for business operations, one to act as trustee for each separate title holding trust and a central account for cash management and distribution. I have multi-member LLC's set up for partnerships and could, operationally use the THT's in the same way but prefer not to. I'm currently considering yet more formal ways of addressing my charitable activities, too as they become a more important part of my day-to-day life.

This all works best when created in concert with your legal, tax, estate planning and pension/retirement team and hopefully they all communicate well on your behalf.

If you are serious about this, take the Dyches Boddiford class along with Jack Shea on trusts. If you really have some equity and assets to protect, plan on studying and become a serious student if this area. It's more than you will find for free on these forums unless you are up to trusting your estate to the opinions of strangers. 

If you have a general understanding of what your gross estate is, what size you will reasonably grow it to, and how it is to be operated, you can guide your experts better so they can best advise you. Be careful about getting all tied up in arguments about the validity of entity or another since you'll get lots of opposing opinions, both here and sitting around bars and at parties.